Atlantic Lithium Limited (AIM:ALL) has revealed details of an updated scoping study for its Ewoyaa lithium project in Ghana, prompting Liberum Capital Markets to reiterate its “buy” recommendation.
Liberum, the company’s joint broker, said there is ample scope for resource upside and it continues to regard the Ewoyaa project as among the best in class in terms of operational expenditure and capital expenditure.
“Mineralisation remains open at depth and along strike, with additional untested pegmatites within the immediate resource area – let alone the wider 560km2 Cape Coast lithium portfolio. Regional exploration and target definition are ongoing with four auger drill rigs on site,” Liberum said in a research note.
Resource drilling is set to re-commence in early 2022 and the broker is expecting that the pre-feasibility study and definitive feasibility study (DFS) will follow later in the year.
Liberum believes there is good potential for the life of mine projection in the DFS to be more than 15 years.
Mindful of increasing investor interest in environmental issues, Liberum said it believes that Ewoyaa’s primary spodumene product will be among the most green available due to the availability of hydropower, no need for hazardous chemicals in processing, existing infrastructure and its proximity to a port.
“Piedmont Lithium is investing US$102mln to earn a 50% interest, which would fully fund and fast-track Ewoyaa to production. Piedmont, which has a supply agreement with Tesla, is also to purchase 50% of Ewoyaa’s output. In other words, these agreements significantly reduce IronRidge’s and Ewoyaa’s financing and commercial risks.
“We view the current share price as presenting a relatively inexpensive entry opportunity ahead of a period of significant de-risking, during which we think a number of significant catalysts could emerge,” the broker concluded.
Atlantic Lithium’s share price rose 9.4% to 24.5p; Liberum thinks the shares could hit 32p over the next 12 months.